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Orient Brings in Rosewood CEO

Orient-Express Hotels Ltd.’s (OEH) search for a competent and permanent chief executive officer (CEO) has finally come to an end. Recently, the company revealed that it has appointed John M. Scott III for the position of chief executive officer (CEO), president and director, who will replace the current interim CEO, Philip Mengel. Mengel, however, will continue to serve as a director on its board.

Mengel had been serving as interim CEO since May 2012, following the chairman of the Board, J. Robert Lovejoy’s decision to bow out from his 10-month tenure as interim CEO. The management churn came in the wake of the resignation of Paul White from the position of president and CEO in July 2011. Since then, Orient-Express was on an extensive lookout for a suitable successor.

The newly appointed CEO, Scott, has donned important roles in his illustrious career. Before joining Orient-Express, Scott held the post of president and CEO at Rosewood Hotels & Resorts – a renowned upscale hotel brand comprising 17 properties across seven countries with combined revenues of more than $500 million.

Under his leadership, Rosewood reached to a new height. His supervision doubled the number of hotels under management, substantially scaled up the company’s EBITDA and built up an active development pipeline of new hotel projects.

With his vast know-how in the ultra-luxury lodging sector, Scott can easily be tagged as a veteran in this sector. With his affluent knowledge in strategy development, operation, finance and brand building, we expect him to provide meaningful support to Orient-Express.

As a point of reference, Orient-Express had declined the takeover bid from The Indian Hotels Company Ltd. owned by Tata Group, considering that the offer price of $12.63 per share was not sufficient for the property.

We remain cautious on the stock at the current level based on its top-line miss in the second and third quarters of the year. Hence, the new role for Scott, as the CEO at Orient, invests him with additional responsibility in a sluggish business environment.

Orient-Express which competes with the likes of Hyatt Hotels Corporation (H), currently retains a Zacks #3 Rank, implying a short-term ‘Hold’ rating on the stock. We are also maintaining our long-term ‘Neutral’ recommendation on the stock.